Tax practitioner granted R50,000 bail over alleged R9.6m SARS fraud

Muleso, 45, appeared in court on Monday following his arrest by the Hawks. The case centres on alleged misrepresentations made in tax returns for a close corporation over a period spanning March 2016 to March 2020.

Alleged misrepresentation of tax liabilities

Investigators allege that Muleso, acting as a tax return practitioner, misrepresented the close corporation’s taxable position to SARS. The allegation is that he submitted nil income tax returns even though the entity allegedly had taxable business income.

The matter came to the attention of SARS after irregularities were detected. The tax authority then referred the issue to the Hawks for further investigation.

That investigation included an examination of the close corporation’s banking records and tax declarations. According to the Hawks, the review allegedly identified significant discrepancies in the entity’s value-added tax submissions.

“A subsequent examination of the close corporation’s banking records and tax declarations allegedly revealed significant discrepancies in its value-added tax (VAT) submissions,” Eastern Cape Hawks spokesperson Warrant Officer Ndiphiwe Mhlakuvana said.

Alleged VAT discrepancies

The investigation alleges that output tax was understated by more than R2.7 million. It also alleges that input tax claims were overstated by more than R6.1 million.

The alleged VAT irregularities resulted in reported financial prejudice of R8,854,305.86, according to Mhlakuvana. When the alleged VAT and income tax liabilities are combined, the total reported prejudice to SARS exceeds R9.6 million.

These figures form part of the allegations before the court. They are not a final finding of guilt, and the criminal case will still have to proceed through the legal process.

Arrest followed warrant

The Hawks said Muleso was arrested after a warrant was issued. He was apprehended at the KuGompo City Magistrates’ Court, where he had appeared in connection with a separate matter involving similar charges.

He was then taken before the Mthatha Specialised Commercial Crimes Court, which granted him bail of R50,000.

A bail decision concerns whether an accused person may remain out of custody while the case continues. It does not determine the outcome of the charges. The allegations will be tested as the matter moves through the court process.

Case postponed for docket contents

The matter has been postponed to 18 January 2027 for the contents of the docket. The docket contains the information and evidence gathered by investigators and is considered as the prosecution and defence prepare for the next stage of the case.

The investigation remains ongoing. The Hawks have also indicated that further arrests are imminent.

The case highlights the role of tax practitioners in submitting information to SARS on behalf of businesses. Where tax declarations are alleged to differ from a company’s financial records, investigators may examine banking information, tax submissions and other documentation to establish whether the reported liabilities accurately reflect the entity’s taxable position.

For now, Muleso remains out on bail while the allegations are investigated and the court process continues.